Japan's government appears to have spent around 10 trillion yen ($63 billion) buying yen in recent weeks, according to Citi. The total could eventually climb to 30 trillion yen.
Bank of Japan data suggests authorities likely intervened on April 30 with 5 trillion yen and another 5 trillion during May 1-6. This compares with 9.1 trillion yen in 2022 and 15.2 trillion yen in 2024.
As in the past, Tokyo intervened after USD/JPY crossed 160. The pair fell to 155 after intervention but rebounded to around 158.
Citi sees a possibility that intervention could reach similar or greater levels. If USD/JPY falls below 155, it could extinguish latent demand among Japanese importers to buy dollars.
However, high crude oil prices and equity market strength remain negative for the yen, Citi warns. USD/JPY would likely rebound quickly once intervention ceases.
Japan's foreign currency reserves exceed $1.3 trillion. From 2022 to 2024, reserves fell from $1.4 trillion to $1.2 trillion. Citi notes that U.S. bond market conditions are more stable now, and if the Finance Ministry accepts a similar drawdown, authorities could purchase around 30 trillion yen — suggesting the recent intervention may be just the beginning.
